Government Must Reduce Import Duty, GST On Gold To 7%, Say Experts
Ahammed MP. Chairman, Malabar Gold & Diamonds:
As a part of the Union Budget 2021-22 expectations, the government must reduce import duty on gold and GST to 7 percent to curb large scale gold smuggling in the country, boost gold trade and strengthen consumer confidence and demand for gold jewellery. The government should create an enabling environment for the jewellery retail trade to introduce MRP pricing in jewellery without any pricing break-up in terms of GST or other taxes. MRP-based billed transactions, in a way, will make the jewellery retail trade tax-compliant and boost the government’s Tax Collection.
At present, gold attracts 12.5 per cent import duty and 3 percent GST and total duty and GST implication works out at 15.5 percent. Such high taxes have led to large-scale smuggling and tax evasion. Therefore, reducing import duty-GSTimplication to 7 percent is an effective measure to prevent those industry malpractices. High import duty is the root cause of smuggling and tax evasion. The government must assess the adverse impact of higher import duty on the jewellery trade and propose duty reduction to make both trade and consumption of gold transparent.
Slashing duty and GST on gold is in line with the government’s move to curb unauthorized transactions in the trade. Bringing the jewellery industry under the purview of the Anti-Money Laundering Act is a proof of government’s effective decision-making. The trade expects similar swiftness from the concerned ministry to reduce import duty on gold.” Although the tax and duty implication is 15.5 per cent on gold,the actual implication comes to around 20 percent after adding the mining royalties. Several countries such as The United States, China, Singapore, NewZealand, Malaysia, UAE, Oman, Saudi Arabia, Qatar, Bahrain and Kuwait have eliminated import duty on gold to curb gold smuggling.
The gold and diamond trade together accounts for 7.5 per cent of the country’s GDP and 14 percent of the country’s total exports. About 60 lakh people are employed in this sector. Therefore, the government should take steps to facilitate comprehensive development of the grade trade sector so that it can continue to play a pivotal role in the growth of the economy. “Reduced import duty will destroy the illegal gold trade spread across the country which is backed by an international smuggling lobby centered mainly in African countries. To bring in transparency in pricing, the government should set up a committee comprising government officials and members of the jewellers associations which will set the board rate. Consumers must support growth and development of the country by paying taxes. The government, the business community, all industry stakeholders and the media should collectively create awareness among the people for paying Taxes.